Sources of Working Capital? – A Conundrum

Working Capital funding

Golden Investment Scenario

Sources of Working Capital. There are times in business when all parts of the commercial jigsaw suddenly come together. The jigsaw may have been in construction for a few months or for many years but when the moment arrives decisions need to be made rapidly to secure all aspects of your project. To proceed or not to proceed? It is the supply of working capital that can define the success or failure of your intricately planned project.

The conundrum is that you have a well-defined, financially attractive business proposition that all industry professionals are salivating over yet only a few hours ago the jigsaw was finally completed and now invoices need paying. The assets are defined, the business plan is in place, the principle funding has been sourced and confirmed……yet legal fees, planning fees, accountants fees and much more need now to be paid. The bank regards your project as pre-revenue so will not advance funds. As the principal project leader you may have exhausted your private reserves. So where is the working capital to be sourced from?

The conundrum is made worse because you believe you have planned for every eventuality yet suddenly you need to bridge a large financial gap before trading revenues occur or the full project funding is in place. What steps can you take to overcome this sudden shortfall?

To have secured funding for your project you will have ‘pitched’ to institutions or private investors. Prepare to do this again but revisit the pitch, be positive, be swift and offer a well-defined short term advantage to investors who are prepared to commit immediately in the knowledge that full funds are imminent and debts can be repaid. You have planned for this moment. See: Pitch Perfect

Use your professional network of colleagues to spread the word and be prepared to offer an equity position in the new company. Do not be too generous for if your initial business proposition attracted investment then to give too much away for such a short term, yet critical investment is folly. To beg or steal is unprofessional yet to borrow from HNW investors on beneficial terms is to be recommended.

Summary. All the best laid plans can come unstuck. Act swiftly and with confidence to secure short term monies, ensuring that this debt can be repaid through the successful implementation of your excellent business plan. Investors, step forward, assess the risks and support these potentially high reward entrepreneurs to succeed.

PS If you are a HNW investor and wish to consider such entrepreneurial support let me know. There are many Investment Opportunities

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